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“Exploring Evidence-Backed Leadership Strategies to Help Biden and McCarthy Avoid a Catastrophic Debt Default”


The United States stumbles towards an unprecedented default that could arrive as early as June 1, 2023.

In order for the US to borrow more money, Congress must raise the debt ceiling – currently $31.4 trillion. President Joe Biden has refused to negotiate with House Republicans overspending, instead demanding Congress pass a standalone bill to raise the debt limit. House Speaker Kevin McCarthy won a small victory on April 26 narrowly pass a more complicated bill with GOP support that would raise the debt ceiling, but also cut spending and reverse Biden’s policy agenda.

Biden recently conference leaders invitedincluding GOP leader McCarthy, to the White House on May 9 to discuss the situation, but insisted he is not willing to negotiate.

Instead of leading the nation, Biden and McCarthy seem to be waging a partisan political war. Biden probably doesn’t want to be seen as giving in to Republican demands and dwindling legislative victories for his liberal constituency. McCarthy, with his slim majority in the House, has to appease even most hardline members of his party.

To have studied leadership for over 25 years i would suggest that their leadership styles are polarized, oppositional, short term and highly ineffective. Such combative leadership risks a default of guilt that could plunge the US into a recession and potentially lead to a global economic and financial crisis.

While it may seem almost impossible in the current political climate, Biden and McCarthy have an opportunity to turn this crisis around and leave a positive and lasting legacy of courageous leadership. To do this, they must put aside partisanship and take a different approach. Here are a few evidence-backed strategies to get them started.

1. Moving from a zero-sum game to a more holistic approach

Political leaders often run the risk of being hijacked by members of their own party. McCarthy faces direct threats from conservative members of his coalition.

For example in January, McCarthy agreed to admit a single legislator force a vote for his impeachment to win enough votes from ultra-conservative lawmakers to become speaker. That and other concessions give the most extreme members of his party a great deal of control over his agenda and limit McCarthy’s ability to compromise with the president.

Biden, who just announced that he is running for re-election in 2024bets on his first term performance – like unprecedented climate investments and student loan forgiveness – will help him keep the White House. If he negotiates all that away, it could cost him the support of important parts of his base.

My research partner Marianne W. Lewis and I label this kind of short-term, one-sided leadership as “either/or” thinking. That is, this approach assumes that leadership decisions are a zero-sum game – every inch you give is a loss for your side. We argue that this kind of leadership does exist limited at best and harmful at worst.

Nelson Mandela, left, and FW de Klerk won the Nobel Peace Prize for helping end apartheid in South Africa.
Jon Eeg/Pool photo via AP

Instead, we discover that good leadership involves what we call “both/and” thinking, which means that we seek integration and unity between opposing perspectives. History provides examples of how this more holistic leadership style has produced substantial results.

President Lyndon B. Johnson and fellow Democrats struggled to get a vote in the Senate to the Civil Rights Act of 1964 and needed Republican support. Despite his initial opposition, Republican Senator Everett McKinley Dirksen—then the minority leader and a staunch conservative—led his peers to cross party lines and join the Democrats in passing the landmark legislation.

Another example came in 1990 when the then President of South Africa Frederik Willem de Klerk free opponent Nelson Mandela from prison. The two former political enemies agreed on a deal that ended apartheid and paved the way for democratic government they both won the Nobel Peace Prize. Four years later, Mandela became president.

This integrative leadership approach begins with a shift in mindset where opposing parties are no longer seen as contradictory, but are instead valued as a source of new possibilities. So in the case of a debt ceiling, holistic leadership means at least Biden doesn’t simply raise his hand and refuse to negotiate spending. He could recognize that Republicans have a point about the country’s skyrocketing debt burden. McCarthy and his party may recognize that they can’t just do it cut spending. Together, they could achieve greater success by developing an integrated plan that cuts costs, raises taxes, and raises the debt ceiling.

2. Defend a long-term vision over short-term goals

What we call “short-term thinking” plagues American politics. Leaders are under pressure to show voters immediate results. Biden and McCarthy both have strong incentives to focus on a short-term victory for their side with the presidential and congressional elections coming up. Instead of, thinking long term can help leaders with competing agendas.

In a 2015 study Natalie Slawinski and Pratima Bansal studied executives at five Canadian oil companies dealing with tensions between keeping costs down in the short term and making investments that could reduce their industry’s long-term environmental impact. The two scholars found that those who focused on the short-term struggled to reconcile the two competing forces, while long-term thinkers managed to find more creative solutions that kept costs down but also enabled them to do more to combat climate change.

Likewise, if Biden and McCarthy want to avoid a financial crisis and leave a lasting legacy, they would benefit from focusing on the long term. Finding clues in this shared long-term goal, rather than highlighting their significant differences on how to get therecan help to get out of their impasse and look for a solution.

3. Be adaptive, not self-confident

Voters often praise political leaders who act quickly and with confidence and self-assurance, especially in times of economic uncertainty.

But finding a creative solution to America’s greatest challenges often requires leaders to set aside the swagger and adapt, which means taking small steps to listen to each other, experiment with solutions, evaluate those results, and adjust their approaches as needed. to adjust.

I spent a year researching business decisions at a Fortune 500 technology company following the senior management teams responsible for six units – each with sales in excess of $1 billion. I found that the team leaders who were most innovative tended to be good at adapting. They constantly examined whether they had made the right investment and made changes if necessary.

Small steps are also necessary to build unlikely relationships with political enemies. In his 2017 book, “Cooperate with the enemy”, organizational consultant Adam Kahane describes how he facilitated workshops to help former enemies take small steps towards reconciliation, such as in South Africa at the end of apartheid and in Colombia during the drug wars. Such efforts helped South Africa develop into a successful multiracial democracy and Columbia end decades of war with a guerrilla uprising.

two white men shake hands and smile with other people turning their backs
Former Democratic Gov. Phil Bredesen, second from left, and former Republican Gov. Bill Haslam, right, have built a good relationship since leaving office despite their political differences.
AP Photo/Mark Humphrey

This kind of leadership requires small steps toward connection rather than big political leaps. It also requires both sides to let go of their positions and consider where they are willing to compromise.

Biden and McCarthy could learn from two former Tennessee governors, Democrat Phil Bredesen and Republican Bill Haslam. Although she face each other on almost every political issue, including gun control, the two former leaders have built a constructive relationship over the years. Instead of tackling the big divisive issues, they started by identifying the small points where they agreed. As a result, they built more trust and continued to look for connections.

So when a gunman recently killed six people at a Nashville school, the two former governors were able to move beyond pointing the finger and focus on how their respective sides could work together on meaningful gun reform.

Of course, it’s easier to do this when you’re out of the office and the pressure from voters and parties is gone. And although the current governor of Tennessee, Bill Lee agreed on the need for gun reformhis fellow Republicans in the state legislature refused.

A gamble, but…

And that’s why I know this is a gamble. The two main political parties are as polarized as ever. The likelihood of a breakthrough leading to anything more than a last-second deal breaching the debt ceiling may remain quite low going forward – and even that seems questionable.

But it’s about more than the debt ceiling. The US faces a long list of problems big and small, from high inflation and a banking crisis to the war in Ukraine and climate change.

Americans need and deserve leaders who address these issues by working together for more creative outcomes.

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